Chan Wing (Vanuatu) Ltd & Chan v Moti [1998] QSC 41

2 IN THE SUPREME COURT OF QUEENSLAND No. 6285 of 1997 Brisbane BETWEEN: CHAN WING (VANUATU) LIMITED First Plaintiff AND: LAURIE CHAN Second Plaintiff AND: JULIAN RONALD MOTI Defendant REASONS FOR JUDGMENT - CHESTERMAN J. CATCHWORDS: Counsel: Solicitors: Hearing Date: Judgment delivered 2fMarch 1998 SETTING ASIDE JUDGMENT - deficiency of defendant's particulars of defence - unsatisfactory nature of plaintiff's material - stay of proceedings - clearly inappropriate forum. Ms R.L. Seiden for the applicant. Mr G.J. Radcliffe for the respondent. Blake Dawson Waldron for the applicant. Presser Law for the respondent. 20 March 1998 -- 1 of 13 -- IN THE SUPREME COURT OF QUEENSLAND Brisbane BETWEEN: AND: AND: CHAN WING (VANUATU) LIMITED LAURIE CHAN JULIAN RONALD MOTI REASONS FOR JUDGMENT - CHESTERMAN J. ~ Judgment delivered 2j1 March 1998 No. 6285 of 1997 First Plaintiff Second Plaintiff Defendant The defendant applies to set aside the interlocutory judgment entered against him on 9 September 1997 and to set aside the final judgment entered on 3 December 1997. Should the judgments be set aside, the defendant also seeks an order that the action be stayed permanently, or dismissed, on the ground that the Supreme Court of Queensland is a clearly inappropriate forum to determine the plaintiffs' claims against him. The plaintiffs issued their writ on 15 July 1997. The defendant was served on 25 July 1997 at Bond University on the Gold Coast. He is a resident of the Port of Vila in the Republic of Vanuatu where he practices as a barrister and solicitor of the Supreme Court of Vanuatu. He is a managing partner of a law firm, Motis Pacific Lawyers with practices in the Solomon Islands as well as Vanuatu. During the second half of 1997, the defendant regularly came to Queensland. He was a Visiting Associate Professor in the School of Law at Bond University teaching Trans- national Business Law. His courses occupied a day or two at least fortnightly. -- 2 of 13 -- 2 Despite being served, the defendant did not enter an appearance. His reason was that he "did not believe that the Supreme Court of Queensland had jurisdiction in this matter as all parties were non-residents and the subject matter of the dispute was located in Vanuatu and governed by the laws of Vanuatu and fell to be adjudicated under the laws of Vanuatu". The solicitor who effected service of the writ on the defendant advised him, at the time of service, to file an entry of appearance because the plaintiffs intended to proceed to judgment as soon as possible. Later that day, the defendant told the solicitor by telephone that he intended to enter a conditional appearance. No appearance, conditional or otherwise, having been entered, the plaintiffs' obtained interlocutory judgment for damages to be assessed. The damages were assessed by a District Court judge and final judgment was given on 3 December 1997 in the sum of$190,963.40. The nature of the plaintiffs' case appears from the statement of claim. It alleges that in or about July 1996 the defendant was retained to act as solicitor for the plaintiffs in connection with the acquisition, by the first plaintiff which was to be incorporated for that purpose, of the shares in a company known as Le Flamingo Ltd. That company operated a nightclub in Port Vila. Express terms of the retainer were that the defendant would do all things necessary to incorporate the first plaintiff (the statement of claim actually pleads the first defendant) and to effect the transfer of shares from the vendor, one Guifre, to the first plaintiff and to allot shares in the first plaintiff to the second plaintiff and one Thomas Chan. In breach of the retainer, it is alleged that the defendant:- "(a) failed and/or refused to record and/or reflect in the official records ownership of the shares of the First Plaintiff in the names of the Second Plaintiff and his father, Thomas Chan; (b) recorded the shareholding in the First Plaintiff in the name of the Second Plaintiff (as to 50% of the shares) and Motis Nominees Ltd (as to the balance of such shares); -- 3 of 13 -- 3 (c) failed and/or refused:- (i) to adequately or at all investigate and inquire as to the true financial position ofLe Flamingo Ltd; (ii) to transfer ownership of the shares in Le Flamingo Ltd from Guifre to Chan Wing (Vanuatu) Ltd; (d) took possession and control of the business known as Le Flamingo Nightclub as from 3 January 1997 and conducted same for his own benefit and to the exclusion of the First and Second Plaintiffs until 20 March 1997; (e) paid himself or alternatively the firm of Motis Pacific Lawyers from the proceeds of operating the Nightclub the sum of $5 ,240.00 (estimate) being moneys owed by Le Flamingo Ltd to the Defendant for legal services provided by the Defendant and/or Motis Pacific Lawyers prior to purchase of the shares in Le Flamingo Ltd by the First and/or Second Plaintiff; (f) paid the sum of $3,760.00 (estimate) to Motis Trust Account without authority of the First and Second Plaintiff from the proceeds of the Nightclub on 26 November 1996; (g) paid the sum of $7,915.00 (estimate) to Motis Pacific Lawyers on 15 January 1997 from the proceeds of operating the Nightclub without the authority of the First or Second Plaintiff; (h) paid the sum of$765.00 (estimate) to Air Vanuatu from the proceeds of operating the Nightclub without the authority of the First and Second Plaintiff on 31 January 1997; (i) paid the sum of $2,015.00 (estimate) to Motis Pacific Lawyers on 17 February 1997 from the proceeds of operating the Nightclub without the authority of the First and Second Plaintiff; G) appointed himself as director ofLe Flamingo Ltd and despite demand on 21 March 1997, refused to resign as director thereof; (k) demanded payment of Guifre by the First and Second Plaintiffs, who was subsequently paid the sum of $16,000.00 before executing fresh share transfers in order that the shares could be transferred correctly; (1) despite demand therefor, refused to deliver such executed share transfers or any documents belonging to the Plaintiffs or either of them to the Plaintiffs. " From this it appears that the essence of the plaintiffs' case is that the defendant did not -- 4 of 13 -- 4 effect a transfer of the shares in Le Flamingo Ltd from Guifre to the first plaintiff; nor the allotment of shares in the first plaintiff to the second plaintiff and Thomas Chan; and that the defendant himself took possession of the nightclub and received the proceeds of its operations. The defendant initially sought to set aside the judgment entered on 9 September 1997 on the basis that it was irregularly entered. This basis was abandoned, the defendant accepting that the judgment was regularly entered. Instead he sought to have the judgment set aside pursuant to 0.15 r.1O which provides that:- "Any judgment by default under this order may be set aside or varied by the court or a judge upon such terms as to costs or otherwise as the court or judge may think fit". The factors usually considered on such an application are:- (a) whether the defendant has given a satisfactory explanation for his failure to appear; (b) whether there has been any delay in making the application; (c) whether the defendant makes out an arguable defence on the merits to the plaintiffs' claim. Fortunately for the defendant:- ". . . it may be said that it is the last of these considerations that . . is the most cogent. It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had lapsed provided that no irreparable prejUdice is thereby done to the plaintiff." (per McPherson J. in National Mutual Life Association oj Australasia Ltd v. Oasis Developments Pty Ltd (1983) 2 Qd.R. 441 at 449.) Has the defendant made out an arguable defence on the merits? The defendant's affidavit which essays this task is unsatisfactory in many respects. He said:- "13) I deny that the terms of the retainer are as outlined in paragraphs 3 and 4 of the Statement of Claim filed herein and say that: a) The Plaintiffs have not particularised the terms of the retainer -- 5 of 13 -- 5 sufficiently to include the terms of payment nor the fact that the retainer was between the Second Plaintiff and Motis, not me personally. b) The proper Defendant to this aspect of the Plaintiffs claim is Motis and not me. c) To accept that the facts are as alleged would violate Motis partnership agreement, firm policy and various statutes and regulations in force in the Republic of Vanuatu. d) The Second Plaintiff disappeared shortly after Christmas 1996 and could not be contacted for many weeks. His failure to communicate with Motis and his consistent failure to provide instructions on matters required to complete various transactions, his repeated failure (despite his promises) to remit funds necessary to complete the share sale transaction can be readily pointed to as circumstances which rendered the performance of the retainer/contract impossible. Despite his verbal assurances, the Second Plaintiff also failed to deliver the signed Deed of Indemnity in favour of MNL and TPL which has left those nominee companies exposed to suit and liability. e) In all correspondence exchanged between Motis and the Plaintiffs' solicitors both in Port Villa and on the Gold Coast, MNL and TPL had always indicated that they were prepared to resign and/or abdicate from their appointed positions if the Second Plaintiff would deliver the signed Deed oflndemnity to Motis. t) As to the claim for damages for negligence and/or breach of duty of care, Motis could, in addition to the factual circumstances already deposed herein, readily show on the basis of material kept or noted in the files pertaining to all of these matters that there was no want of care on the part of Motis. The Second Plaintiffs conduct had put Motis in embarrassing situations on a number of occasions. In their assessment of the appropriate standard of care that ought to have been exercised by Motis, this Honourable Court would need to have regard to the practices of solicitors and firms operating in the Republic of Vanuatu. g) Thomas Chan was only to occupy the position of director, and not shareholder, but that this term was· varied to exclude any involvement by Thomas Chan, by the Second Plaintiffs oral instructions to me on 1 August 1996; h) Motis was only to advise on, document and complete the transfer of ownership of shares, but was not required to investigate the -- 6 of 13 -- 6 business activities ofLe Flamingo (which was to be undertaken by Mr David Borland, and accountant employed by the Second Plaintiff in Honiara, Solomon Islands). 14) The Second Plaintiff was unable to make the final payment on 9 November 1996 and therefore unable to complete the LFL share transaction. Consequently it was not possible to transfer the shares ofLFL to the First Plaintiff. 15) At the request of the Second Plaintiff and Mr Guifre (the vendor), MNL and TPL agreed to act as interim shareholders and directors of LFL, holding the shares in trust for the eventual owner. At all times MNL and TPL acted in accordance with their position as trustee and not as beneficial owner. 16) A full-time manager, Peter Mathias, was appointed to LFL by the Second Plaintiff some time in October 1996. 17) The manager was responsible for the day to day management and administration of the nightclub. 18) The manager took instructions from and reported directly to the Second Plaintiff. 19) Upon the instructions of the Second Plaintiff, the manager sent the Second Plaintiff daily accounts and reports. 20) To our knowledge all receipts were banked into LFL's account at the National Bank of Vanuatu, which sent monthly statements to LFL and the Second Plaintiff 21) Detailed accounts showing the receipt and application offunds have been prepared and would have been filed in proceedings deposed to below, however, the Plaintiffs had filed a Notice of Motion to strike out the Vanuatu proceedings and consequently these accounts were not filed pending the hearing and determination ofthe Notice of Motion. 22) I have not yet examined the accounts and can therefore not verify the allegations in paragraphs 6(e)-(i) but say that any funds transferred were done so as a result of bona fide business transactions and with full knowledge and concurrence of the Second Plaintiffs and not to enrich myself. 23) I have never been nor am currently a director ofLFL. That position is held by MNL and TPL. 24) On or about 19 March 1997, the manager resigned from his post. -- 7 of 13 -- 7 25) On 20 March 1997, Presser Law acting on behalf of the Plaintiffs herein, took possession of the nightclub, by order of Acting Chief Justice Lunabek, of the Supreme Court of Vanuatu. " "MNL" is Motis Nominees Limited, a company, I assume, controlled by the defendant. "TPL" is Trans-equity Pacific Limited, a company, which likewise I assume, controlled by the defendant. "LFL" is Le Flamingo Ltd. "Motis" is Motis Pacific Lawyers. I find it disturbing that the defendant should assert that the plaintiffs' allegations should be rejected because they would "violate Motis partnership agreement firm policy and various statutes and regulations in force in the Republic of Vanuatu" without providing any material corroboration. As a practitioner in Vanuatu, and one with sufficient standing to accept appointment as an associate professor in trans-national business law, it should not have been beyond the defendant's capacity to give particulars of the agreement, the policy and the statutes which invalidate the basis of the plaintiffs' claim. Equally unsatisfactory is the defendant's claim that he could not perform his retainer because the second plaintiff failed to provide instructions and did not provide the purchase moneys for the shares agreed to be bought from Guifre. The fact appears to be that Guifre executed share transfers but the transferee became one of the defendant's companies and not Mr Chan. This is said by the defendant to have been at the request of the second plaintiff and Mr Guifre, but I cannot conceive how the vendor would have executed and handed over share transfers without receiving the full purchase price. Moreover, the plaintiffs' material deposes in detail to the moneys remitted to make up the purchase price and, indeed, to exceed it. The defendant's unparticularised assertion that the second plaintiff failed to remit funds necessary to complete the transaction is difficult to accept at face value. Another unsatisfactory aspect of the defendant's material is his assertion that MNL and TPL were always prepared to relinquish their positions as shareholders and directors upon -- 8 of 13 -- 8 delivery by the second plaintiff of a deed of indemnity. I can understand why the defendant would require such a deed ifhe were, at the request of his client, to act as a shareholder and/or director in the client's company. What I have difficulty in understanding is why the defendant would accept the positions without an indemnity in the first place if the provision of the deed were a term of his accepting appointment. This particular assertion by the_defendant seems to me to sit ill with the earlier claim that the transaction could not proceed because of a lack of instruction and money from the second plaintiff A further instance of the defendant's reluctance to provide details of his defence is found in his affidavit that "Motis could ... readily show on the basis of material kept or noted in the files pertaining to all of these matters that there was not want of care on the part of Motis . . . in the recessment of the appropriate standard of care . . . this Court would need to have regard to the practices of solicitors and firms operating in the Republic of Vanuatu. " It is extraordinary if the defendant is in possession of documents which show no want of care on his part that he would not bother to exhibit them, or extracts from them, to show he has a defence on the merits. Similarly, if the practices of solicitors in Vanuatu is relevant to the point, it is, to say the least, surprising the defendant would not seek to inform the Court of those practices. If things stood there, I would be reluctant to find that the defendant has shown an arguable defence on the merits. I have, however, concerns about the plaintiffs case. At the heart of the case, it seems to me, is the allegation that the defendant himself took possession of the nightclub which the acquisition of the shares from Guifre should have given to the plaintiffs. Proceedings were commenced by the plaintiffs in the Supreme Court of Vanuatu to obtain the possession of the nightclub premises and business, but against Guifre not the defendant. An order was in fact made by the Supreme Court of Vanuatu on 20 March 1997 directing Guifre to deliver to the -- 9 of 13 -- 9 plaintiffs the means of access to the nightclub's premises. The affidavit filed by the plaintiffs in support of that application deposes that shares in the first plaintiff were allotted to the defendant or one of his companies, with the second plaintiffs authority. This is quite contrary to the allegations in para. 6(a) and (b) of the statement of claim. These facts seem to me to undermine a substantial part of the plaintiffs' case as pleaded. The dealings between the plaintiffs and the defendants are complicated and the facts are not as the plaintiffs have sought to make them out. Although the defendant's material is deficient, its shortcomings take on less significance when the plaintiffs' material is also unsatisfactory. I think it would be wrong to allow the judgment to stand. In reaching this conclusion I am reinforced by the fact that the assessment of damages would, in any event, have had to be set aside. The defendant was not given the requisite notice of the hearing at which damages were fixed by the District Court. Order 39 rule 52(1) provides:- "( 1) Where judgment is given for damages to be assessed . . . the damages shall ... be assessed by a. . . District Court judge . . . and the party entitled to the benefit of the judgment may, after obtaining the necessary date for hearing and at least ten days before the date of the hearing . . . serving notice thereof on the party against whom the judgment is given, proceed accordingly. (2) Where the party against whom a judgment is given has not for the time being an address for service, a notice under this rule shall be deemed to be properly served on the party if left, or sent by post in a pre-paid letter addressed to the party, at his or her normal or last known residence ... and, if served by post, to have been served at the time at which it would have been delivered in the ordinary course of post. " The defendant resided in Port Vila. This fact, and his address, was known to the plaintiffs. They did not post notice of the hearing to the defendant's residence. Instead, notice was posted to the defendant at Bond University. He never resided there. It was submitted for the plaintiffs that 0.39 r.52 refers to a residence in Queensland only and if there be no such residence, no notice need be given. I reject the submission. The rules -- 10 of 13 -- 10 clearly contemplate service on defendants out of the jurisdiction and, as this case illustrates, they allow service in the jurisdiction on a defendant who resides outside. There is no warrant for reading the rule as though residence were limited to "residence in Queensland". It follows that the assessment of damages should be set aside. That being so, I think it appropriate, for the reasons indicated earlier, to set the interlocutory judgment aside as well. In the event that judgment is set aside, the applicant seeks an order that the action be stayed on the ground that this Court is a clearly inappropriate forum for the conduct of the litigation between the parties. It was briefly submitted that the jurisdiction the Court has for entertaining the plaintiffs' suit against the defendant was based upon a fortuity, the chance presence of the defendant at the Gold Coast allowing him to be served. It was argued that the defendants' residence and place of business is in Vanuatu and the alleged breaches of retainer were committed there. The plaintiffs' point to two factors connecting the suit with Queensland. The first is that the defendant is a regular visitor here and the second is that the plaintiffs incurred several items of expenditure in Queensland and these items are included in the heads of damage claimed against the defendant. I think this is one of the cases, thought by the High Court to be rare (Voth v. Manildra Flour Mills Pty Ltd (1990) 171 CLR.538 at 558) in which an available foreign tribunal is the natural or more appropriate forum but in which it cannot be said that the local tribunal is a clearly inappropriate one. The Court pointed out that in such a case in which the ascertainment of the natural forum is a complex and finely balanced question, the Court may more readily conclude that it is not a clearly inappropriate forum. According to Voth at 554, it is established that:- 1. A plaintiff who was regularly invoked the jurisdiction of the court has a prima facia right to insist upon this exercise. -- 11 of 13 -- 11 2. The traditional power to stay proceedings which have been regularly commenced on inappropriate forum grounds is to be exercised in accordance with the general principle empowering a court to dismiss or stay proceedings which are oppressive, vexatious or an abuse of process and the rationale for the exercise of the power to stay is the avoidance of injustice between parties in a particular case. 3. The mere fact that the balance of convenience favours another jurisdiction or that some other jurisdiction would provide a more appropriate forum does not justify the dismissal of the action or the grant of a stay. 4. The jurisdiction to grant a stay or dismiss the action is to be exercised with great care or extreme caution. An important factor in deciding whether or not to stay Cl? action on this ground is whether justice can be done in another forum at substantially less inconvenience or expense. See Spiliada Maritime Corporation v. Cansulex Ltd (1987) AC. 460 at 477 per Lord Goff. This passage was recommended by the High Court in Voth (at p.565) as affording assistance in the exercise of the discretion. The decisive factors appear to me to be that the jurisdiction of the court was regularly invoked and that the defendant's presence in Queensland at the time of service was not a mere fortuity. He was a regular visitor to the State for the purpose of carrying on part of his livelihood. The second plaintiff, though not a resident of Queensland, appears to be a frequent visitor here because it is his mother's home. The plaintiffs could have sued either in the courts of the Republic of Vanuatu where the defendant resides or in the courts of the Solomon Islands where the second plaintiff resides and the defendant has a practice which he visits. The defendant did not put before the Court any material to show that justice could be done in the courts of Vanuatu, or the Solomon Islands, at substantially less inconvenience or expense than in Queensland. Given the -- 12 of 13 -- 12 defendant's regular attendances in Queensland, it is not self-evident that conducting litigation here will be substantially less inconvenient or more expensive for him than either of the other fora. Given, also, that the choice of any of the three courts will produce inconvenience and some added expense to one or other of the litigants, I do not think that it can be said that Queensland is a clearly inappropriate forum. The orders I make are:- 1. The judgment obtained against the defendant on 9 September 1997 be set aside. 2. That the defendant pay the plaintiffs' taxed costs of and incidental to this application and the entering of judgment. 3. The costs referred to in (2) not to include the costs of the assessment of damages before the District Court or the costs of attempting to execute the judgment. -RJ ~~ o\~~ {M.\e.r ~ \\~()Mt~ ""~~~ t~ ~ -- 13 of 13 --